The past week has been very volatile for the global — and Swiss — financial markets, causing everyone who has savings in the bank and investments to worry about how to protect their money. This is what you should know.
Reacting to growing uncertainties surrounding the US trade tariffs, the Swiss Market Index (SMI) plummeted by more than 5 percent so far this week, with further dips likely in the coming days and possibly weeks.
Whether you have investments or just regular savings account, you are probably worried about what these upheavals will do to your finances, and how you can mitigate the damage.
The Local put these questions to Daniel Dreier, a personal finance expert at Moneyland, a consumer platform for — as its name suggests — all matters related to money.
So what should you do with your assets right now?
if you invested for the long haul and your portfolio is well diversified, you may not have to do anything at all, Dreier said.
However, his advice is to be cautious about your personal finances in good times and bad.
Though you can’t do much about your current portfolio while the market is going crazy, generally speaking, “basic rules of investing remain the same regardless of the market situation,” Dreier said.
And that means you should “only invest money that you can afford to live without.”
“From a historical perspective, it can take 10 years or longer for markets to recover from larger crashes. If you will need the money within the foreseeable future, then you should look at short-term saving and investment solutions,” he pointed out.
They include, for instance, savings accounts (read more about those below), medium-term notes and fixed deposits, as well as bonds.
Also, practice a smart investment strategy to avoid huge losses in the future.
As it is impossible to predict when markets will rise or fall, “investing small amounts on a regular basis (as opposed to investing all or much of the available investment capital at once) results in an averaging effect where the purchases made at favourable points in time balance out the purchases made at unfavourable points in time,” Dreier said.
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What about savings?
According to Dreier, “market observers expect interest rates to continue to sink.”
Therefore, interest rates that do not match or exceed inflation rates “result in a real loss in purchasing power.”
For this reason (and even in today’s low-interest environment), comparing interest rates and using the highest-yield available will remain important.
“As a general rule, savers should consider spreading their assets out between multiple banks,” Dreier noted.
“This approach lowers the risk of losing money in the event of a bank insolvency, because bank depositor protection is limited a per-customer and per-bank basis.”
READ ALSO: How safe is your money in a Swiss bank?
And the same also holds true for fixed deposits and medium-term notes, he added.
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If you lost money due to the tariff fiasco, will you be able to recoup these losses?
Nobody has a crystal ball, but there is a glimmer of hope on the horizon.
That’s because “investing in Swiss stocks has practically always paid off, regardless of stock market crises,” Dreier noted.
